US FCPA: Understanding the Foreign Corrupt Practices Act
US FCPA
La Ley de Prácticas Corruptas en el Extranjero de 1977 es una ley federal de los Estados Unidos que prohíbe a los ciudadanos y entidades estadounidenses sobornar a funcionarios de gobiernos extranjeros para beneficiar sus intereses comerciales. Enacted to stop bribery of foreign officials & to restore public confidence in integrity of US business system
FCPA exceptions:
1) Reasonable and bona-fide expenditures: A payment that is directly related to demonstration, explanation, or promotion of products or services, or directly related to performance or execution of a contract, is considered to be reasonable & bona fide expenditure and therefore not prohibited (but see Intel case in China)
2) Payments which are lawful under foreign law: If payment is lawful under written regulations & legislation of relevant foreign country, it is not prohibited (but even most corrupt countries have them): i.e., of foreign official’s country. Exception arguably would apply, e.g. if business followed that country’s written guidelines regarding permissible financial arrangements w managers of state-owned cos, provided payments not made in exchange for corrupt actions by recipient. We are not aware of any country with written laws that permit bribery & where defense based on this has been successful
Corruption:
Corruption can take many forms that vary in degree from minor use of influence to institutionalized bribery. Transparency International’s (transparency.org) definition = “the abuse of entrusted power for private gain”. Can mean not only financial gain but also non-financial advantages, such as travel and entertainment. Bribery: Soborno: “Bribery: An offer or receipt of any gift, loan, fee, reward or other advantage to or from any person as an inducement to do something which is dishonest, illegal or a breach of trust, in the conduct of the enterprise’s business.” Extorsion: “The solicitation of bribes is the act of asking or enticing another to commit bribery. It becomes extortion when this demand is accompanied by threats that endanger the personal integrity or the life of the private actors involved.”
OECD Convention
La Organización para la Cooperación y el Desarrollo Económicos es un organismo de cooperación internacional, compuesto por 36 estados, cuyo objetivo es coordinar sus políticas económicas y sociales, United Nations Convention against Corruption (UNCAC) = 1st legally binding int’l anti-corruption instrument (2003, now 140 countries) Convención de las Naciones Unidas contra la Corrupción (CNUCC) = 1er instrumento internacional contra la corrupción jurídicamente vinculante (2003, ahora 140 países) Obliges states to implement wide & detailed range of anti-corruption measures affecting laws, institutions & practices (focus on prevention, criminalization & law enforcement, int’l cooperation, asset recovery, technical assistance & info exchange, & mechanisms for implementation (includes both mandatory & non-mandatory provisions. Ley Global Magnitsky sobre Responsabilidad de Derechos Humanos es una ley aprobada en Estados Unidos que persigue a extranjeros acusados de corrupción y violaciones a los derechos humanos. UN Global Compact = strategic policy initiative for businesses that are committed to aligning their operations and strategies w 10 universally accepted principles in areas of human rights, labor, environment & anti-corruption. Global Compact’s rapid growth = over 8700 corporate participants from over 130 countries, it is largest voluntary corporate responsibility initiative in world. Principle 1: Businesses should support & respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Principle 3: Businesses should uphold the freedom of association & effective recognition of right to collective bargaining; Principle 4: the elimination of all forms of forced & compulsory labor; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation. Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. “The Bribery Act, however, broadens corporate liability by making a company liable to criminal prosecution if anyone associated with it pays a bribe in connection with any aspect of its business.” “Consented or connived” require some awareness of material facts. “Consent” requires some agreement to course of action followed, while “connive” requires only tacit agmt or turning of a blind eye. “For the first time, non-UK companies will be brought within the jurisdiction of the SFO if they have some business presence in the UK. What this will mean is that a foreign corporate which is involved in corruption anywhere in the world will be within the SFO’s jurisdiction if it has a business presence here even if the corruption has no connection with that business presence. This is a very important provision for us. I believe that foreign corporates are waking up to the significance of this.” Arbitration: voluntary, blinding (winer loser, and you cant ignore), non-judicial. Institutional arbitration: in addition arbitrators + ministers: ICCC AAA LCIA. Ad hoc arb: 1 arbitrator, less cost. Arbitration vs litigation: speed, cost, relative informality, flexibility (agreement), confidentiality, no national courts (no ventaja), minimun review (no segunda instancia). UNCITRAL model law: Uniformity, predictability, familiarity, relevent interpretators. Additional Protocols Supplemental Rules Rules of Arbitration Arbitration Agreement National Arbitration law